Citizens Community Bancorp, Inc. (CZWI): PESTLE Analysis [Nov-2025 Updated]

You need to know if Citizens Community Bancorp, Inc. (CZWI) is a safe bet right now, and the short answer is yes, but with a clear asterisk. As a regional bank operating in Wisconsin and Minnesota, CZWI is financially sound-they even redeemed $15 million in subordinated debt in Q3 2025-but the economic headwinds are real. The bank's projected annual revenue growth of 8.6% is solid, still it lags the broader US market's 10.1% average, plus they are in a tech fight against bigger players. We've mapped out the Political, Economic, Sociological, Technological, Legal, and Environmental (PESTLE) factors for 2025 so you can see exactly where the risks and opportunities lie, from regulatory tailoring to the competitive digital spend they defintely need to make.

Citizens Community Bancorp, Inc. (CZWI) - PESTLE Analysis: Political factors

Potential federal deregulatory shift in 2025 easing capital compliance burdens.

You're watching Washington closely, and honestly, the political shift in 2025 is defintely a tailwind for a community bank like Citizens Community Bancorp, Inc. The new administration and Congress have signaled a clear priority: easing the post-2008 financial crisis regulatory burden, particularly the Dodd-Frank Act (DFA).

The core of this is reducing compliance costs to free up capital for lending and growth. For a bank with total assets of $1.727 billion as of September 30, 2025, any reduction in paperwork and complex modeling requirements translates directly to higher operational efficiency. Think of it as a significant cut to your non-interest expense, which was already $11.1 million in the third quarter of 2025. Less time spent on compliance means more time spent on relationship banking.

Focus on regulatory 'tailoring' which favors smaller regional banks like CZWI.

The concept of regulatory 'tailoring' is a huge advantage for Citizens Community Bancorp, Inc. It's the official recognition that a bank with $1.727 billion in assets doesn't pose the same systemic risk as a money-center bank. The Office of the Comptroller of the Currency (OCC) announced actions in October 2025 to reduce supervisory burden by tailoring examination scope and frequency based on risk, not just size. That's a common-sense move that should have happened years ago.

The key number here is the $10 billion asset threshold. Citizens Community Bancorp, Inc. is operating well below this, which shields it from the most stringent rules, like certain stress testing and capital adequacy requirements that apply to larger regional banks. This regulatory relief allows management to focus capital on core business activities, like the share repurchases of 135,252 shares for $2.019 million in Q3 2025, which boosts shareholder value.

Here's the quick math on the regulatory sweet spot:

Regulatory Threshold	Citizens Community Bancorp, Inc. (Q3 2025)	Impact of Tailoring
Systemically Important (DFA)	$100 Billion+	Exempt
Enhanced Supervision	$10 Billion+	Exempt
Total Consolidated Assets	$1.727 Billion	Directly benefits from OCC's tailored, risk-based supervision

Increased political pressure on the Federal Reserve's monetary policy decisions.

Political pressure on the Federal Reserve (the Fed) is at its most overt point in memory, and this impacts your net interest margin (NIM). The White House and Congress are exerting significant pressure for interest rate cuts to ease financial strain on consumers and boost economic growth. This political dynamic is creating volatility in the bond market and uncertainty about the future path of the Federal Funds Rate.

The Fed's staff inflation forecast for 2025 and 2026 includes upward pressure from tariffs, making their job harder. If the Fed succumbs to political pressure and cuts rates prematurely, it risks reigniting inflation. If they hold too long, they risk damaging the job market. This uncertainty is why the Federal Open Market Committee (FOMC) was reportedly split on a rate cut decision in December 2025. For Citizens Community Bancorp, Inc., a premature cut could compress your higher-yielding loan portfolio faster than your deposit costs decline, putting pressure on the $13.2 million in Net Interest Income reported in Q3 2025.

State-level political focus on community lending and small business support in Wisconsin/Minnesota.

The state-level political environment in Citizens Community Bancorp, Inc.'s core markets of Wisconsin and Minnesota is highly supportive of community lending, which is a direct opportunity for your loan growth. The bank's local-first approach aligns perfectly with these state initiatives.

In Minnesota, the state is actively deploying the State Small Business Credit Initiative (SSBCI) funding. In July 2025, Governor Walz announced $33.3 million in new funding for small businesses. This directly creates partnership opportunities for Citizens Community Bancorp, Inc.'s loan officers, particularly through programs like the Automation Loan Participation Program, which offers low-interest loans up to $500,000 for manufacturing and technology businesses. Similarly, the Wisconsin Economic Development Corporation (WEDC) is spearheading programs like the Business Development Loan Program, which targets sectors with fewer than 500 employees. This state-backed focus acts as a de-risked pipeline for new commercial and industrial (C&I) loans, helping to offset the $22.6 million decrease in loans receivable seen in Q3 2025.

• Minnesota SSBCI Funding (2025): $33.3 million announced for 225 small businesses.
• Loan Cap Example: Automation Loan Participation Program offers loans up to $500,000.
• Wisconsin Focus: WEDC supports businesses with fewer than 500 employees.

Citizens Community Bancorp, Inc. (CZWI) - PESTLE Analysis: Economic factors

Net interest margin (NIM) benefiting from lower deposit costs in the high-rate environment.

The high-rate environment is a double-edged sword, but Citizens Community Bancorp has skillfully managed its funding costs, leading to a significant expansion in its Net Interest Margin (NIM). For the third quarter of 2025, the NIM improved to 3.20%, a notable jump from 2.63% in the same period a year prior.

This improvement is a direct result of lower funding costs, which helped push the total interest expense down to $9.040 million in Q3 2025. That's a huge win, especially as the company navigates what's defintely a challenging interest rate cycle. The core spread-the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities-has improved, allowing the bank to capture more profit from its lending activities.

Here's the quick math on the NIM trajectory:

Metric	Q3 2025 Value	Q3 2024 Value	Change
Net Interest Margin (NIM)	3.20%	2.63%	+57 bps
Net Interest Income	$13.2 million	$11.3 million	+17.0%
Year-to-Date NIM	3.11%	2.71%	+40 bps

The bank's focus on commercial deposits, which grew slightly in Q3 2025, also helps stabilize the funding base and control the overall cost of deposits.

Q3 2025 Net Income was $3.7 million, but nine-month earnings of $10.1 million are down from the prior year.

While the quarterly performance looks solid, the year-over-year trend shows a slight deceleration in overall profitability. Net income for Q3 2025 was $3.7 million, a positive increase from $3.3 million in Q3 2024. However, when you look at the nine-month period ending September 30, 2025, the picture changes.

Year-to-date net income stands at $10.1 million, which is down from $11.0 million for the comparable nine-month period in the prior year. What this estimate hides is the normalization of credit costs. The decline is largely attributed to a significant shift in the provision for credit losses, which was a provision of $1.75 million year-to-date in 2025, compared to a credit of $(2.73) million in the prior year period. This normalization suggests the bank is building up its reserve, which is prudent, but it weighs on the bottom line. Earnings are steady, but credit costs are normalizing.

Slower projected annual revenue growth of 8.6% trails the US market average of 10.1%.

The growth outlook for Citizens Community Bancorp is realistic but trails the broader sector. Revenue is forecast to grow by 8.6% annually. To be fair, that's still healthy growth, but it's modest when compared to the US market average projection of 10.1%.

This slower pace sparks a debate about the bank's ability to capture new business compared to larger, more aggressive industry players who are showing stronger top-line momentum. This is a key economic constraint, as it limits the bank's operational leverage and its ability to absorb increasing non-interest expenses, which rose to $11.1 million in Q3 2025.

• Projected annual revenue growth: 8.6%.
• US market average growth pace: 10.1%.
• Expansion is modest by sector standards, creating a strategic headwind.

Continued pressure on middle-income consumers and small businesses in the operating region.

Operating primarily in Wisconsin and Minnesota, the bank is exposed to the economic realities facing its regional customer base: middle-income consumers and small businesses. The general economic backdrop includes inflationary pressures, labor shortages, and a high-rate environment that hits consumer confidence and spending.

We see the tangible impact of this pressure in the bank's asset quality metrics as of Q3 2025:

• Nonperforming assets increased to $16.7 million (0.96% of total assets), up from $14.3 million (0.82%) at year-end 2024.
• Nonaccrual loans rose, driven by a single $9.0 million multi-family real estate exposure moving to substandard status.
• Special mention and substandard loans increased to $34.2 million from $27.4 million at year-end, with multi-family and hotel Commercial Real Estate (CRE) being notable risk segments.

The increase in nonperforming loans, particularly in CRE segments like multi-family, suggests that some small business and real estate investors are struggling with debt servicing in the current economic climate. This requires disciplined underwriting and a strong credit culture to manage the risk of future charge-offs.

Citizens Community Bancorp, Inc. (CZWI) - PESTLE Analysis: Social factors

Strong community bank focus on consumers, businesses, and agricultural (ag) operators.

You're looking for a bank with deep local roots, and Citizens Community Bancorp (CZWI) has explicitly positioned its strategy around this community-centric model. The bank has been executing a strategic transformation since 2016, shifting from a primarily consumer-focused lender to a more balanced community bank. This is a critical social factor because it ties the bank's stability directly to the health of its local economies, not complex, distant financial products.

This focus is evident in their funding base. As of December 31, 2024, the deposit portfolio composition shows a heavy reliance on local relationships, which are generally stickier and more stable than wholesale funding sources. The total loans receivable, net, stood at $1.301 billion as of September 30, 2025, demonstrating the scale of their local lending commitment.

Here's the quick math on their Q4 2024 deposit base, which highlights their social focus:

Deposit Segment	Percentage of Total Deposits (Q4 2024)
Consumer	57%
Commercial	28%
Public (Municipal/Government)	13%
Wholesale (Brokered)	2%

To be fair, a 57% consumer deposit base means a large portion of their funding comes from everyday checking and savings accounts, which is a strong social indicator of trust. They are defintely a community bank first.

High employee engagement (95.1% in 2024) indicates a stable culture and lower turnover risk.

A bank's culture is a social factor that directly impacts customer service and operational efficiency. High employee engagement translates to lower staff turnover, which means more experienced bankers are serving you and your community. Citizens Community Bancorp tracks this metric closely, showing a significant positive trend.

The bank reported an employee engagement survey participation rate of 95.1% in 2024, a substantial jump from 71.8% in 2021. That participation rate is phenomenal. A high response rate like that signals that employees feel heard and are invested enough to provide feedback, which is a key indicator of a stable internal environment. As of December 31, 2024, the company employed 232 individuals, emphasizing that this engagement covers the entire workforce.

• Total Employees (Dec 2024): 232 individuals.
• Engagement Participation Rate (2024): 95.1%.
• Implication: Stable culture reduces operational risk and improves relationship continuity for commercial clients.

Serving diverse regional economies (Chippewa Valley, Twin Cities, Mankato) mitigates single-market risk.

Citizens Community Bancorp operates across a geographically and economically diverse footprint, which is a social factor that acts as a natural risk mitigator against a downturn in any single industry. Their primary markets span both urban and rural areas in Wisconsin and Minnesota.

The bank operates 21 full-service branches across these regions, ensuring a physical presence that reinforces their community bank identity. The key is the economic diversification across the markets:

• Chippewa Valley Region (Wisconsin): Mix of manufacturing, healthcare, and education.
• Twin Cities Metro Area (Minnesota): Large, diverse metropolitan economy with finance, technology, and corporate headquarters.
• Mankato Market (Minnesota): Strong agricultural base, plus regional healthcare and retail.

This mix-from the high-density Twin Cities to the agricultural operators in Mankato-allows the bank to smooth out performance volatility. When one sector slows, another may be accelerating, which is a core strength of the community banking model.

Increased public scrutiny on regional bank stability following 2023 events.

The failures of institutions like Silicon Valley Bank in 2023 dramatically increased public and investor scrutiny on the liquidity and deposit stability of all regional banks. For a community bank, social trust is their most important asset. Citizens Community Bancorp has responded to this social concern with transparent, strong liquidity metrics.

The focus immediately shifted to uninsured deposits (deposits over the FDIC limit). The bank's disclosures show a significant buffer. At the end of 2024, their on-balance sheet liquidity, combined with collateralized borrowing capacity, was $725 million, which represented 273% of their uninsured and uncollateralized deposits. This is a clear, decisive number that directly addresses post-2023 social anxieties about bank runs and liquidity risk.

The fact that their deposits, excluding brokered deposits, grew in the three quarters following the 2023 bank failures suggests that their strong community ties and clear communication successfully converted social anxiety into customer confidence. This is where the social factor becomes a financial strength.

Citizens Community Bancorp, Inc. (CZWI) - PESTLE Analysis: Technological factors

Competitive pressure requires investment in digital banking platforms and AI-powered tools.

You are operating in a market where your customers expect the same seamless digital experience from a community bank as they get from a national giant or a FinTech (financial technology) startup. This means the pressure to invest in digital platforms and AI is not optional; it's a cost of staying in business.

Citizens Community Bancorp, Inc. (CZWI) has historically committed to innovation, allocating an estimated $2 million in 2024 toward technological upgrades to enhance both customer experience and operational efficiency. This investment is crucial for maintaining competitive parity in core services like mobile banking, online loan applications, and real-time payment processing. To be fair, a $2 million annual tech budget is a fraction of what larger money-center banks spend, which puts a high premium on strategic, targeted deployment.

The industry is rapidly adopting technologies like Application Programming Interfaces (APIs) for embedded finance and Artificial Intelligence (AI) for fraud protection. Specifically, treasury executives at midsize companies are using AI for customer authentication and other fraud-protection tools. CZWI must focus its limited resources on high-impact areas like:

• Deploying AI-driven fraud monitoring to protect its $1.481 billion in deposits.
• Modernizing its core banking system to support open banking APIs.
• Enhancing mobile app features to reduce reliance on physical branches.

Need to defend market share against larger banks with superior FinTech budgets.

The scale of Citizens Community Bancorp, Inc. (CZWI), with total assets of approximately $1.727 billion as of September 30, 2025, makes it a prime target for market share erosion by larger, more technologically advanced competitors. These larger institutions can pour hundreds of millions into proprietary FinTech development, creating a significant barrier for smaller players. Your challenge is not to match their spending, but to strategically acquire or partner for technology that delivers a disproportionate competitive advantage.

The competitive landscape demands that CZWI's technology investments focus on customer retention and acquisition, especially in the Twin Cities and Mankato, Minnesota markets. One concrete example of success is the increase in deposits per branch, which rose significantly from $27.6 million to $71.3 million, reflecting technology-enabled growth and branch network optimization. Still, the bank must keep its digital offerings current, or risk losing commercially valuable, tech-savvy customers to rivals.

Required regulatory compliance with new personal financial data rights rules in 2025.

The most pressing technological mandate in 2025 is the compliance with the Consumer Financial Protection Bureau's (CFPB) new Personal Financial Data Rights rules, stemming from Section 1033 of the Dodd-Frank Act. This rule requires data providers-like CZWI-to make covered consumer data available to customers and authorized third parties, typically via secure Application Developer Interfaces (APIs).

This is a massive undertaking for any bank, but especially for community banks concerned about the cost of building and maintaining secure data-sharing systems. The CFPB's final rule was published in October 2024, but the agency reopened the rulemaking process in August 2025 with an Advance Notice of Proposed Rulemaking (ANPR) to reconsider key issues, including who pays for data access and the scope of data security requirements. This regulatory uncertainty complicates planning and budget allocation.

Here's the quick math on the compliance challenge:

Regulatory Compliance Factor	CZWI's Technological Requirement (2025)
Data Access Mandate (CFPB 1033)	Build and maintain compliant APIs for consumer data sharing.
Data Security & Privacy	Establish robust third-party risk management protocols and adhere to Gramm-Leach-Bliley Act standards.
Compliance Deadline	Original deadlines were phased, but the CFPB plans to extend them due to litigation and the ANPR, with the largest banks originally set for April 2026. CZWI must still plan for a significant, defintely costly, near-term technology overhaul.

Operational efficiency gains from technology are necessary to offset rising non-interest expenses.

To maintain profitability, Citizens Community Bancorp, Inc. must use technology to drive down its efficiency ratio, especially as non-interest expenses continue to be a significant line item. For the third quarter of 2025, the company reported total non-interest expense of $11.051 million. This figure is a critical metric because technology investment is often initially recorded as a non-interest expense (software, professional fees, compensation), but its ultimate goal is to reduce future operating costs.

Technology must deliver tangible, measurable operational efficiency gains to justify the upfront cost. Concrete actions include:

• Automating back-office processes like loan origination and compliance checks.
• Using AI-powered chatbots for first-line customer support to reduce staffing needs.
• Optimizing the branch network further, a strategy that has already seen deposits per branch jump to $71.3 million.

The focus should be on reducing the compensation and related benefits component of non-interest expense, which was a key driver of expense changes in the past. Technology is the only way to offset rising costs without sacrificing customer service or growth. Finance: draft a 13-week cash view by Friday that explicitly models the ROI timeline for the new API compliance platform.

Citizens Community Bancorp, Inc. (CZWI) - PESTLE Analysis: Legal factors

You need to be acutely aware of the shifting regulatory landscape, particularly how new asset thresholds and credit quality mandates directly impact your operational costs and capital planning. The key takeaway for Citizens Community Bancorp, Inc. is that your asset growth has pushed you into a more complex regulatory tier in 2025, demanding a more sophisticated compliance framework, but smart capital management moves, like the debt redemption, are providing a buffer.

New 2025 Community Reinvestment Act (CRA) asset-size thresholds require compliance monitoring.

Your total assets at March 31, 2025, reached $1.780 billion, placing Citizens Community Bancorp, Inc. above the $1.609 billion threshold that defines a 'Large Bank' for Community Reinvestment Act (CRA) purposes. This is a significant shift. Being categorized as a Large Bank means you must now comply with a more complex, stringent CRA examination process, moving beyond the simpler evaluation procedures for an 'Intermediate Small Bank.'

This new classification requires much more detailed data collection and reporting on lending, investment, and service activities across your assessment areas. Honestly, this is a heavy lift for compliance and IT. You'll need to monitor performance under the new framework immediately, as the Large Bank status is based on asset size as of December 31 of both of the prior two calendar years, and being over the threshold signals an imminent regulatory change.

CRA Asset-Size Threshold (Effective Jan 1, 2025)	Asset Range	CZWI Classification Implication (Based on Q1 2025 Assets)
Small Bank	Less than $1.609 billion	Exceeded
Intermediate Small Bank	$402 million to $1.609 billion	Exceeded
Large Bank	At least $1.609 billion	CZWI is now in this category (Total Assets: $1.780 billion)

Potential easing of Dodd-Frank Act capital and stress testing requirements could provide flexibility.

While the overall trend for the largest banks is toward tighter regulation, for community banks like Citizens Community Bancorp, Inc., there's a tangible effort by regulators to reduce burden. The Office of the Comptroller of the Currency (OCC) has been actively tailoring its regulatory and supervisory frameworks. This means your examination scope and frequency are becoming more consistent with a risk-based supervision model, rather than fixed, one-size-fits-all requirements.

This tailoring, which includes possible adjustments to the Community Bank Leverage Ratio (CBLR) framework, could free up resources. For a bank with a Tier 1 Leverage Ratio of 11.9% at March 31, 2025, well above the minimum 4.0% required for a well-capitalized institution, any easing of reporting or testing requirements translates directly into lower non-interest expense. That's a clear opportunity to shift resources from compliance paperwork back to core business growth.

Nonperforming assets were $14.5 million in Q1 2025, requiring vigilant credit loss provisioning.

Vigilant credit loss provisioning remains a legal and financial imperative, driven by the Current Expected Credit Losses (CECL) accounting standard. Your nonperforming assets (NPAs) stood at $14.5 million at the end of Q1 2025, a modest increase from $14.2 million at year-end 2024. This modest rise requires close attention, especially as credit quality metrics can be volatile.

What's interesting is the Q1 2025 provision for credit losses (PCL) was a negative $0.25 million, meaning the bank actually reduced its reserve. Here's the quick math: this negative provision was a result of a $0.35 million negative provision on the Allowance for Credit Losses (ACL) for loans, partially offset by a $0.10 million provision on ACL for unfunded commitments. This suggests management felt confident in the loan portfolio's credit quality despite the slight NPA increase, but you still need to be ready to increase the ACL, which was $20.2 million or 1.49% of total loans at March 31, 2025, if economic conditions worsen.

Redemption of $15 million in subordinated debt strengthens the balance sheet against regulatory capital concerns.

A key strategic action that bolsters your regulatory standing was the redemption of $15 million in 6% subordinated debt on September 1, 2025. This move was a proactive step to manage your capital structure and reduce future interest expense, especially as the debt was approaching a potential reset to a higher rate.

The redemption strengthens the balance sheet by removing a liability and improving your capital efficiency, which is reflected in the tangible common equity (TCE) to tangible assets ratio rising to 9.13% by Q3 2025. This improved capital position provides a greater cushion against unexpected credit losses and gives the Board more flexibility for future capital deployment, such as the authorized 5% common stock buyback program.

• Redeemed $15 million of 6% subordinated debt on September 1, 2025.
• Improved Tangible Common Equity to Tangible Assets ratio to 9.13% by Q3 2025.
• Helped avoid a potential interest rate reset to a higher SOFR-linked rate.

Finance: Monitor the next OCC regulatory updates and draft a compliance plan for the new CRA Large Bank requirements by the end of the year.

Citizens Community Bancorp, Inc. (CZWI) - PESTLE Analysis: Environmental factors

Federal de-prioritization of new climate-related financial disclosures in 2025 reduces immediate reporting cost.

The regulatory environment for climate-related financial disclosures has shifted dramatically in 2025, creating a near-term reprieve for regional banks like Citizens Community Bancorp, Inc. The federal push for comprehensive climate reporting has largely stalled. Specifically, the Securities and Exchange Commission (SEC) ended its defense of the climate disclosure rules adopted in March 2024. Also, federal banking regulators, including the Federal Reserve and the FDIC, formally withdrew their joint guidance on climate-related financial risks in October 2025.

This de-prioritization means you won't face the immediate, high-cost burden of establishing a new, complex climate risk management and reporting framework at the federal level right now. It cuts out the immediate compliance expense and the need to hire specialized staff for the kind of extensive Task Force on Climate-related Financial Disclosures (TCFD) reporting that was anticipated. That's a defintely welcome reduction in non-interest expense for the 2026 budget cycle.

However, the underlying risk hasn't gone away; the regulators' expectation remains that institutions must manage all material risks, and climate is a material risk in the Midwest. The relief is on the disclosure front, not the risk management front.

State-level ESG (Environmental, Social, and Governance) requirements, especially in Minnesota, must defintely be monitored.

While the federal government steps back, state-level requirements are stepping up, and this is highly relevant given Citizens Community Bancorp, Inc.'s significant footprint in Minnesota. Your total assets of $1.727 billion as of September 30, 2025, place you squarely over the $1 billion asset threshold for Minnesota's climate risk disclosure law.

Minnesota's Senate File 2744 (SF 2744), the Climate Risk Disclosure Survey, requires banks and credit unions with more than $1 billion in assets to complete an annual climate risk disclosure survey by July 30th each year. You must monitor this closely, as non-compliance will be a clear regulatory failure. Also, the state's legislative environment is fragmented, with counter-movements like the 'Stop Environmental Social Governance (ESG) and Social Credit Score Discrimination Act' (SF851) introduced in January 2025, which aims to prohibit discrimination against industries like energy and agriculture. This creates a volatile political environment where ESG-related policy is a moving target.

Here is a quick look at the conflicting Minnesota regulatory landscape you must navigate:

• Pro-Disclosure: SF 2744 mandates climate risk disclosure for banks over $1 billion in assets.
• Anti-ESG: SF851 seeks to prevent the state from contracting with or investing in companies that 'boycott' key industries like production agriculture.

Increased credit risk exposure from commercial and ag borrowers affected by climate events (e.g., Midwest farm income pressure).

The most tangible environmental risk is the direct impact of climate volatility on your agricultural and commercial loan portfolio in the Midwest. Citizens Community Bancorp, Inc. actively offers agricultural real estate and agricultural operating loans.

The financial health of your farm borrowers is under severe pressure in 2025. Data from the Federal Reserve Bank of Minneapolis's 9th District (which includes Minnesota) shows a clear and deteriorating trend:

• Nearly 80% of Midwest farm lenders reported year-over-year drops in farm income as of late 2025.
• Repayment rates on non-real-estate loans fell for the eighth consecutive quarter in Q3 2025.
• The typical commercial crop farm in the upper Midwest is projected to have a net average net farm income of -$12,000 for the 2025 fiscal year, a sharp decline from the $95,000 average in 2023.

This pressure translates directly into credit risk. Your allowance for credit losses on loans was $22.18 million as of September 30, 2025, representing 1.68% of total loans. That coverage level needs constant scrutiny against the backdrop of falling farm incomes and rising loan demand. The decline in farm household spending and increased reliance on operating credit are clear red flags for future nonperforming assets.

Opportunity to finance green energy or sustainable ag projects in the regional markets.

The risk of climate-related credit deterioration is also an opportunity to pivot your lending strategy. The federal government has injected significant capital into green finance that is designed to flow through community lenders. The Inflation Reduction Act's $27 billion Greenhouse Gas Reduction Fund (GGRF) includes a $6 billion Clean Communities Investment Accelerator (CCIA) that works with local community lenders.

This fund is specifically designed to provide risk capital and credit enhancement to help local financial institutions, like Citizens Community Bancorp, Inc., underwrite green loans in disadvantaged communities, which are prevalent in your rural markets. By partnering with one of the national or regional CCIA awardees, you could effectively de-risk new lending in areas like:

• Financing solar panels and energy efficiency upgrades for commercial and agricultural buildings.
• Providing capital for sustainable agriculture practices (e.g., no-till equipment, cover crop implementation) that reduce farmer input costs and improve long-term resilience.

In Minnesota, there are already state-level programs that can be leveraged, such as the Sustainable Agriculture Loan Program (maximum loan of $40,000 per farm family) and the Agricultural Growth, Research, and Innovation (AGRI) Sustainable Agriculture Demonstration Grant (up to $50,000 per project). Your local presence makes you a natural partner for these smaller, high-impact loans. This is a chance to move beyond traditional ag lending and establish a new, resilient revenue stream.

Here's the quick math on the risk/opportunity trade-off:

Metric	2025 Outlook	Actionable Impact for CZWI
Midwest Farm Income (Upper Midwest Crop Farm)	Projected -$12,000 net average income	Increases credit risk and $22.18 million Allowance for Credit Losses (ACL) scrutiny.
Federal Disclosure Burden	SEC/Federal Regulators withdrew/ended defense of new rules in 2025.	Immediate compliance cost savings on new ESG reporting staff/systems.
Minnesota State Disclosure	SF 2744 requires disclosure for banks over $1 billion (CZWI is $1.727 billion).	Mandatory compliance by July 30th deadline; must allocate resources to survey completion.
Green Finance Opportunity	Federal GGRF includes $6 billion for community lenders (CCIA).	Partner with CCIA intermediary to access de-risked capital for green loans to existing commercial and ag clients.

Next Step: Lending/Strategy: Assign a team lead to identify the regional CCIA awardees in the Midwest and draft a partnership proposal by the end of Q1 2026 to access federal green financing capital.